The impact of political alignment on resource rent distribution in Colombia

Abstract

Subnational governments that are politically aligned with the central government tend to receive more fiscal resources than their non-aligned counterparts. However, the motivations behind this pattern remain contested. While some studies argue that such transfers are intended to reward core supporters, others suggest they aim to buy political support from swing voters ahead of elections. This article revisits the debate through a case study of Colombia. In 2012, the country reformed its royalty revenue-sharing rules, granting the president greater discretion over municipal access to fiscal resources, thereby inducing an alignment effect. Using municipal-level panel data and fixed-effects models, we find evidence of political alignment in the allocation of resource rents. Moreover, the alignment effect is positive for swing municipalities. Our findings underscore the critical importance of balanced policy design in ensuring unbiased transfer distribution and mitigating the inequalities and inefficiencies associated with political alignment.